Allianz Australia and its subsidiary AWP have been ordered by the Federal Court to pay $1.5 million for mis-selling travel insurance policies through Expedia websites, after proceedings taken by the corporate regulator.

The Australian Securities and Investments Commission (ASIC) says the penalties were handed down yesterday as Chief Justice James Allsop ruled the businesses engaged in misleading and deceptive conduct to sell the products between February 2015 and September 2018.

AWP was ordered to pay $1.14 million and Allianz $360,000. They have also been ordered to pay ASIC’s costs.

“The court imposed the penalties after finding Allianz and AWP engaged in misleading and deceptive conduct when selling travel insurance by failing to correctly state how premiums were calculated and by allowing insurance to be sold to ineligible customers,” ASIC said today.

According to ASIC, the court also found the businesses breached their financial services licence obligations by failing to prevent the sale of the products on Expedia to consumers who were ineligible to make claims under the policies.

They also failed to stop Expedia websites from misusing a quote from the Department of Foreign Affairs and Trade about the importance of purchasing travel insurance.

“The insurance industry needs to be transparent and accurate when selling and promoting their products,” ASIC Deputy Chairman Sarah Court said. “People take out travel insurance for peace of mind and to protect their families.

“The value of an insurance policy is in the promise that a consumer can feel confident and secure that they will be looked after if something goes wrong.”

The court in its ruling acknowledged Allianz and AWP’s efforts to make early admissions of liability and took this, and other relevant considerations, into account in determining penalties.

Allianz and AWP say they welcome the finalisation of this matter.

“Allianz and AWP cooperated fully with ASIC to resolve these proceedings expeditiously, including by making admissions and not contesting the penalty sought by ASIC,” they said in a statement to insuranceNEWS.com.au.

“In 2018, Allianz and AWP self-reported the matters [that are] the subject of these proceedings to ASIC.

“Allianz and AWP worked with ASIC on a remediation package and previously paid 15,965 customers an amount totalling approximately $1.14 million in remediation.”

A spokesman for Allianz confirmed the business no longer has contracts with Expedia in Australia.

Consumer Action Law Centre backs the court’s ruling.

“We welcome enforcement action that holds insurers to account for engaging in misleading and deceptive selling of insurance products,” Policy Officer Tom Abourizk said.

“That a major insurer sold insurance products to people who were ineligible to claim under them for over three years is particularly shocking.”

He says the case demonstrates travel insurance is the kind of product that should not be sold using "pressure tactics".

“It is crucial that the ban on the unsolicited selling of insurance products be interpreted to apply to travel insurance,” Mr Abourizk told insuranceNEWS.com.au.

“It also shows that the government’s decision to exempt travel insurance from the deferred sales model for add-on insurance put the interests of businesses with a bad track record ahead of consumers.”

Click here for the court ruling.